GRAVITY Co., Ltd. (NasdaqGM: GRVY) (“Gravity” or “Company”), a
developer and publisher of online and mobile games based in South
Korea, today announced its unaudited financial results for the
first quarter ended March 31, 2020, prepared in accordance with
international Financial Reporting Standards as issued by the
International Accounting Standards Board and business updates.
FIRST QUARTER 2020 HIGHLIGHTS
- Total revenues were KRW 73,260 million (US$ 60,102 thousand),
representing a 2.2% increase from the fourth quarter ended December
31, 2019 (“QoQ”) and a 45.2% decrease from the first quarter ended
March 31, 2019 (“YoY”).
- Operating profit was KRW 10,356 million (US$ 8,496 thousand),
representing a 475.7% increase QoQ and a 56.2% decrease YoY.
- Profit before income tax expenses was KRW 11,250 million (US$
9,229 thousand), representing a 595.7% increase QoQ and a 53.9
decrease YoY.
- Net profit attributable to parent company was KRW 9,263 million
(US$ 7,599 thousand), representing a 2,957.1% increase QoQ and a
53.1% decrease YoY.
REVIEW OF FIRST QUARTER 2020 FINANCIAL
RESULTS
Revenues
Subscription revenues for the first quarter of
2020 were KRW 9,893 million (US$ 8,116 thousand), representing a
37.7 % increase QoQ from KRW 7,185 million and a 58.1% increase YoY
from KRW 6,256 million. The increase QoQ was mainly attributable to
increased revenues from Ragnarok Online and Ragnarok Prequel in
Taiwan. The increase YoY was largely due to increased revenues from
Ragnarok Online and Ragnarok Prequel II in Taiwan.
Royalty and license fee revenues for the first
quarter of 2020 were KRW 3,543 million (US$ 2,907 thousand),
representing a 45.4% increase QoQ from KRW 2,436 million and a 4.8%
decrease YoY from KRW 3,720 million. The increase QoQ was primarily
due to increased revenue from Ragnarok Online in Japan. The
decrease YoY resulted mainly from decreased revenue from Ragnarok
Online in Japan.
Mobile game revenues were KRW 55,982 million
(US$ 45,928 thousand) for the first quarter of 2020, representing a
1.3% decrease QoQ from KRW 56,714 million and a 53.4% decrease YoY
from KRW 120,090 million. The decrease QoQ resulted primarily from
decreased revenues from Ragnarok M: Eternal Love in Southeast Asia
and Europe, and Ragnarok H5 in Korea. Such decrease was partially
offset by increased revenues from Ragnarok M: Eternal Love in
Taiwan and Ragnarok Tactics in Taiwan and Southeast Asia that was
launched on February 25, 2020 and January 2, 2020, respectively.
The decrease YoY was primarily due to revenues from Ragnarok M:
Eternal Love in Southeast Asia, North America, South America and
Oceania and Korea. This decrease was partially offset by increased
revenues from Ragnarok M: Eternal Love in Japan, Taiwan and Europe,
Ragnarok Tactics in Taiwan, Southeast Asia and Thailand.
Other revenues were KRW 3,842 million (US$ 3,151
thousand) for the first quarter of 2020, representing 27.7%
decrease QoQ from KRW 5,316 million and an 8.0% increase YoY from
KRW 3,557 million
Cost of Revenue
Cost of revenue was KRW 48,874 million (US$
40,096 thousand) for the first quarter of 2020, representing a 5.3%
decrease QoQ from KRW 51,635 million and a 51.7% decrease YoY from
KRW 101,237 million. The decrease QoQ was mainly due to decreased
outsourcing fee, commission paid for mobile game services related
to Ragnarok M: Eternal love in Southeast Asia and salaries. The
decrease YoY was mostly from decreased commission paid for mobile
game services related to Ragnarok M: Eternal love in Southeast
Asia, North America, South America and Oceania.
Operating Expenses
Operating expenses were KRW 14,030 million (US$
11,510 thousand) for the first quarter of 2020, representing a
23.0% decrease QoQ from KRW 18,217 million and a 60.4% increase YoY
from KRW 8,746 million. The decrease QoQ was mainly attributable to
decreased advertising expenses related to G-star 2019, The Color of
Dream Fantasy Latale, Ragnarok M: Eternal Love, Ragnarok H5 and
Ragnarok Click H5. The increase YoY was mostly resulted from
increased advertising expenses for Ragnarok Tactics in Taiwan,
Southeast Asia and Korea, commission paid, and research and
development expenses.
Profit before income tax expenses
Profit before income tax expenses was KRW 11,250
million (US$ 9,229 thousand) for the first quarter of 2020 compared
with profit before income tax expense of KRW 1,617 million for the
fourth quarter of 2019 and profit before income tax expenses of KRW
24,389 million for the first quarter of 2019.
Net Profit
As a result of the foregoing factors, Gravity
recorded a net profit attributable to parent company of KRW 9,263
million (US$ 7,599 thousand) for the first quarter of 2020 compared
with net profit attributable to parent company of KRW 303 million
for the fourth quarter of 2019 and a net profit attributable to
parent company of KRW 19,760 million for the first quarter of
2019.
Liquidity
The balance of cash and cash equivalents and
short-term financial instruments was KRW 123,002 million (US$
100,911 thousand) as of March 31, 2020.
Note: For convenience purposes only, the KRW
amounts have been expressed in U.S. dollars at the exchange rate of
KRW 1,218.92 to US$ 1.00, the noon buying rate in effect on March
31, 2020 as quoted by the Federal Reserve Bank of New York.
GRAVITY BUSINESS UPDATE
Ragnarok Online
Gravity Game Tech, a subsidiary in Thailand,
opened Ragnarok online in Thailand on May 28, 2020 and the company
announced 4th job change for Ragnarok online in Korea on May 27,
2020.
Ragnarok Online IP-based Games
- Ragnarok Origin, a MMORPG mobile game
Ragnarok Origin is scheduled to be launched in
Korea in July 2020. The first closed beta test (CBT) has completed
on May 13 with users’ positive feedbacks. The company is preparing
its second CBT before the official launch.
- Ragnarok X: Next Generation, a MMORPG mobile game
Ragnarok X: Next Generation is being prepared
for the service in Taiwan, Hong Kong, and Macau in the second half
of 2020.
- Ragnarok Tactics, a SRPG mobile game
Ragnarok Tactics was launched in Korea on March
31, 2020. The game is scheduled to be launched in global market for
June 2020 target.
- Other Ragnarok Online IP-based games
Ragnarok H5 (locally named Ragnarok Frontier),
an idle RPG game, was launched in Indonesia on March 31, 2020.
Other IP games
A First-Person Shooter (FPS) game, Tactical
Warfare, has started pre-registration and will be launched in
North, Central and South America in June 2020. The game is
published by Gravity Interactive, a subsidiary in the United
States.
Investor Presentation
Gravity issued an investor presentation. The
presentation contains the Company’s recent business updates,
results of first quarter in 2020 and Gravity’s business plan. The
presentation can be found on the Company’s website under the IR
Archives section at http://www.gravity.co.kr/en/ir/pds/list.asp.
Korean and Japanese versions of the presentation are also provided
on the website.
About GRAVITY Co., Ltd.
---------------------------------------------------
Based in Korea, Gravity is a developer and
publisher of online and mobile games. Gravity’s principal product,
Ragnarok Online, is a popular online game in many markets,
including Japan and Taiwan, and is currently commercially offered
in 93 markets and countries. For more information about Gravity,
please visit http://www.gravity.co.kr.
Forward-Looking Statements:
Certain statements in this press release may
include, in addition to historical information, “forward-looking
statements” within the meaning of the “safe-harbor” provisions of
the U.S. Private Securities Litigation Reform Act 1995.
Forward-looking statements can generally be identified by the use
of forward-looking terminology, such as “may,” “will,” “expect,”
“intend,” “estimate,” “anticipate,” “believe”, “project,” or
“continue” or the negative thereof or other similar words, although
not all forward-looking statements contain these words. Investors
should consider the information contained in our submissions and
filings with the United States Securities and Exchange Commission
(the “SEC”), including our annual report for the fiscal year ended
December 31, 2020 on Form 20-F, together with such other documents
that we may submit to or file with the SEC from time to time, on
Form 6-K. The forward-looking statements speak only as of this
press release and we assume no duty to update them to reflect new,
changing or unanticipated events or circumstances.
Contact:
Mr. Heung Gon Kim Chief Financial Officer
Gravity Co., Ltd. Email: kheung@gravity.co.kr
Ms. Jin LeeMs. Minji Oh IR Unit Gravity
Co., Ltd. Email: ir@gravity.co.kr Telephone: +82-2-2132-7800
#
# #
GRAVITY Co., Ltd.Consolidated
Statements of Financial Position
(In millions of KRW and thousands of US$)
|
|
As of |
|
|
|
31-Dec-19 |
|
|
31-Mar-20 |
|
|
|
KRW |
|
|
US$ |
|
|
KRW |
|
|
US$ |
|
|
|
(audited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
79,428 |
|
|
|
65,163 |
|
|
|
82,502 |
|
|
|
67,685 |
|
Short-term financial instruments |
|
|
39,500 |
|
|
|
32,406 |
|
|
|
40,500 |
|
|
|
33,226 |
|
Accounts receivable, net |
|
|
32,253 |
|
|
|
26,460 |
|
|
|
40,748 |
|
|
|
33,430 |
|
Other receivables, net |
|
|
56 |
|
|
|
46 |
|
|
|
413 |
|
|
|
339 |
|
Prepaid expenses |
|
|
1,962 |
|
|
|
1,610 |
|
|
|
2,150 |
|
|
|
1,764 |
|
Other current assets |
|
|
2,664 |
|
|
|
2,186 |
|
|
|
3,869 |
|
|
|
3,173 |
|
Total current assets |
|
|
155,863 |
|
|
|
127,871 |
|
|
|
170,182 |
|
|
|
139,617 |
|
Property and equipment, net |
|
|
6,663 |
|
|
|
5,466 |
|
|
|
8,576 |
|
|
|
7,036 |
|
Intangible assets |
|
|
1,717 |
|
|
|
1,409 |
|
|
|
1,571 |
|
|
|
1,289 |
|
Deferred tax assets |
|
|
7,667 |
|
|
|
6,290 |
|
|
|
9,042 |
|
|
|
7,418 |
|
Other non-current financial assets |
|
|
1,770 |
|
|
|
1,452 |
|
|
|
1,771 |
|
|
|
1,453 |
|
Other non-current assets |
|
|
1,745 |
|
|
|
1,430 |
|
|
|
1,788 |
|
|
|
1,466 |
|
Total assets |
|
|
175,425 |
|
|
|
143,918 |
|
|
|
192,930 |
|
|
|
158,279 |
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
37,496 |
|
|
|
30,762 |
|
|
|
42,029 |
|
|
|
34,481 |
|
Deferred revenue |
|
|
10,748 |
|
|
|
8,818 |
|
|
|
10,389 |
|
|
|
8,523 |
|
Withholdings |
|
|
1,764 |
|
|
|
1,447 |
|
|
|
2,315 |
|
|
|
1,899 |
|
Accrued expense |
|
|
1,175 |
|
|
|
964 |
|
|
|
1,186 |
|
|
|
973 |
|
Income tax payable |
|
|
2,618 |
|
|
|
2,148 |
|
|
|
3,100 |
|
|
|
2,543 |
|
Other current liabilities |
|
|
1,986 |
|
|
|
1,629 |
|
|
|
2,781 |
|
|
|
2,282 |
|
Total current liabilities |
|
|
55,787 |
|
|
|
45,768 |
|
|
|
61,800 |
|
|
|
50,701 |
|
Long-term deferred revenue |
|
|
98 |
|
|
|
80 |
|
|
|
98 |
|
|
|
80 |
|
Other non-current liabilities |
|
|
3,774 |
|
|
|
3,096 |
|
|
|
4,430 |
|
|
|
3,634 |
|
Total liabilities |
|
|
59,659 |
|
|
|
48,944 |
|
|
|
66,328 |
|
|
|
54,415 |
|
Share capital |
|
|
3,474 |
|
|
|
2,850 |
|
|
|
3,474 |
|
|
|
2,850 |
|
Capital surplus |
|
|
27,128 |
|
|
|
22,256 |
|
|
|
27,128 |
|
|
|
22,256 |
|
Other components of equity |
|
|
274 |
|
|
|
225 |
|
|
|
1,577 |
|
|
|
1,294 |
|
Retained earnings |
|
|
84,668 |
|
|
|
69,461 |
|
|
|
93,931 |
|
|
|
77,060 |
|
Equity attributable to owners of the Parent Company |
|
|
115,544 |
|
|
|
94,792 |
|
|
|
126,110 |
|
|
|
103,460 |
|
Non-controlling interest |
|
|
222 |
|
|
|
182 |
|
|
|
492 |
|
|
|
404 |
|
Total equity |
|
|
115,766 |
|
|
|
94,974 |
|
|
|
126,602 |
|
|
|
103,864 |
|
Total liabilities and equity |
|
|
175,425 |
|
|
|
143,918 |
|
|
|
192,930 |
|
|
|
158,279 |
|
* For convenience purposes only, the KRW amounts
are expressed in U.S. dollars at the rate of KRW 1,218.92 to US$
1.00, the noon buying rate in effect on March 31, 2020 as quoted by
the Federal Reserve Bank of New York.
GRAVITY Co., Ltd.Consolidated
Statements of Comprehensive Income
(In millions of KRW and thousands of US$ except
for share and ADS data)
|
|
Three months ended |
|
|
|
31-Dec-19 |
|
|
31-Mar-19 |
|
|
31-Mar-20 |
|
|
|
(KRW) |
|
|
(US$) |
|
|
(KRW) |
|
|
(US$) |
|
|
(KRW) |
|
|
(US$) |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online games-subscription revenue |
|
|
7,185 |
|
|
|
5,895 |
|
|
|
6,256 |
|
|
|
5,132 |
|
|
|
9,893 |
|
|
|
8,116 |
|
Online games-royalties and license fees |
|
|
2,436 |
|
|
|
1,998 |
|
|
|
3,720 |
|
|
|
3,052 |
|
|
|
3,543 |
|
|
|
2,907 |
|
Mobile games |
|
|
56,714 |
|
|
|
46,528 |
|
|
|
120,090 |
|
|
|
98,522 |
|
|
|
55,982 |
|
|
|
45,928 |
|
Other revenue |
|
|
5,316 |
|
|
|
4,361 |
|
|
|
3,557 |
|
|
|
2,918 |
|
|
|
3,842 |
|
|
|
3,151 |
|
Total net revenue |
|
|
71,651 |
|
|
|
58,782 |
|
|
|
133,623 |
|
|
|
109,624 |
|
|
|
73,260 |
|
|
|
60,102 |
|
Cost of revenue |
|
|
51,635 |
|
|
|
42,361 |
|
|
|
101,237 |
|
|
|
83,055 |
|
|
|
48,874 |
|
|
|
40,096 |
|
Gross profit |
|
|
20,016 |
|
|
|
16,421 |
|
|
|
32,386 |
|
|
|
26,569 |
|
|
|
24,386 |
|
|
|
20,006 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
15,491 |
|
|
|
12,709 |
|
|
|
6,665 |
|
|
|
5,468 |
|
|
|
11,007 |
|
|
|
9,030 |
|
Research and development |
|
|
2,845 |
|
|
|
2,334 |
|
|
|
1,877 |
|
|
|
1,540 |
|
|
|
2,872 |
|
|
|
2,356 |
|
Others, net |
|
|
(119 |
) |
|
|
(98 |
) |
|
|
204 |
|
|
|
167 |
|
|
|
151 |
|
|
|
124 |
|
Total operating expenses |
|
|
18,217 |
|
|
|
14,945 |
|
|
|
8,746 |
|
|
|
7,175 |
|
|
|
14,030 |
|
|
|
11,510 |
|
Operating profit |
|
|
1,799 |
|
|
|
1,476 |
|
|
|
23,640 |
|
|
|
19,394 |
|
|
|
10,356 |
|
|
|
8,496 |
|
Finance income(costs): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income |
|
|
631 |
|
|
|
518 |
|
|
|
1,062 |
|
|
|
871 |
|
|
|
1,551 |
|
|
|
1,272 |
|
Finance costs |
|
|
(813 |
) |
|
|
(667 |
) |
|
|
(313 |
) |
|
|
(256 |
) |
|
|
(657 |
) |
|
|
(539 |
) |
Profit before income tax |
|
|
1,617 |
|
|
|
1,327 |
|
|
|
24,389 |
|
|
|
20,009 |
|
|
|
11,250 |
|
|
|
9,229 |
|
Income tax expenses |
|
|
1,334 |
|
|
|
1,095 |
|
|
|
4,627 |
|
|
|
3,796 |
|
|
|
2,004 |
|
|
|
1,644 |
|
Profit for the period |
|
|
283 |
|
|
|
232 |
|
|
|
19,762 |
|
|
|
16,213 |
|
|
|
9,246 |
|
|
|
7,585 |
|
Profit attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
|
(20 |
) |
|
|
(17 |
) |
|
|
2 |
|
|
|
2 |
|
|
|
(17 |
) |
|
|
(14 |
) |
Owners of Parent company |
|
|
303 |
|
|
|
249 |
|
|
|
19,760 |
|
|
|
16,211 |
|
|
|
9,263 |
|
|
|
7,599 |
|
Earning per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted |
|
|
44 |
|
|
|
0.04 |
|
|
|
2,844 |
|
|
|
2.33 |
|
|
|
1,333 |
|
|
|
1.09 |
|
Weighted average number of shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted |
|
|
6,948,900 |
|
|
|
6,948,900 |
|
|
|
6,948,900 |
|
|
|
6,948,900 |
|
|
|
6,948,900 |
|
|
|
6,948,900 |
|
Earning per ADS(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted |
|
|
44 |
|
|
|
0.04 |
|
|
|
2,844 |
|
|
|
2.33 |
|
|
|
1,333 |
|
|
|
1.09 |
|
* For convenience, the KRW amounts are expressed
in U.S. dollars at the rate of KRW 1,218.92 to US$1.00, the noon
buying rate in effect on March 31, 2020 as quoted by the Federal
Reserve Bank of New York.
(1) Each ADS represents one common share.
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